Business plan for western and vietnamese food restaurant

The outstanding figure of this restaurant is a new style of service that applies service style of Western food to Vietnamese food.. ACRONYMS OU-ULB : Open University – Universiteù Libre

(PART-TIME)

Tutor’s name: Dr Nguyen Van Ngai

Ho Chi Minh City (2010)

UNDERTAKINGS

I undertake that all data, information collected and analyzed to do this project are

true Meantime, the business plan for “Western and Vietnamese Food Restaurant” is

my own plan and is studied through academic knowledge, Professors, Friends and

experiences I affirm that this is a new project, which is not ever handover to anyone

else or any other research

Ho Chi Minh City, November 15 th , 2010

Nguyen Van Ut

ACKNOWLEDGEMENT

I do not know how to appreciate all the Professors who have assisted me,

contributed their knowledge, shared their experiences and supported me to fulfill

this MBA course Therefore, I would like to take this opportunity to express my

sincere gratitude and heartfelt thanks to all of them

Especially, I would like to express my appreciation to Dr Nguyen Van Ngai who is

with all his heart to support me doing this final project Despite being very busy, he

always tries to arrange time for instructing my project I have a greatest respect for

his done

I deeply express my heartfelt gratitude to my parents for rearing, educating and

setting up my good life at the beginning day of being born Thanks for my wife who

has arranged her schedule flexibly for my attending this part-time MBA course to

take care of our first baby

I honestly send my best regards to my classmates for sharing their knowledge,

experiences during this course I wish all the best to them and their family

There is nothing more than my deep gratitude to all the Management Boards and the

staffs of The Université Libre de Bruxelles, The Solvay Business School, and The

Open University in Ho Chi Minh City for helping, supporting and for the favorable

conditions that help me doing my study

EXECUTIVE SUMMARY

Foods and beverages are energies for human life It provides fuel to heat and keep

warm our body Besides that, substances in foods and beverages like protein,

carbohydrate, vitamin, etc will help us grow and healthy Without foods and

beverages human cannot live When living in poverty, low-income people will not

consider much about other joyful aspects of life providing that they can have food

enough for their daily life Since their life has been changed, their monthly income

has been increased they start thinking about an enjoyable life, demands that they

have ever had like enjoying delicious foods and being served like a King, etc

The socio-economic growth rate of HCMC is considered as a center of the whole

country that creates more jobs for the citizen and contributes to decrease

unemployment rate of HCMC and the whole country With that improvement, the

citizen income and their life are stable more and more Once they frequently have to

eat outside for less time to prepare cooking at home, they demand a higher level in

both the quality of meals and services in return with money they had paid Through

the survey about consumer’s psychology indicates that consumer’s demands about

meal are now different They are willing to pay amount of money to have a

delicious meal and good services instead of using this amount for several times of

full meals Moreover, the findings obtained from questionnaires shows that the

eaters take hygiene secure in eating-places into consideration

The idea to create an eating-place where can provide service to meet this expect

beside good foods is viable For that reason, I emerged a plan to launch a restaurant

The outstanding figure of this restaurant is a new style of service that applies service

style of Western food to Vietnamese food The purpose is to point into eaters’

psychology about eating Vietnamese foods together in public area served by other

way to prevent spread disease through eating line A combination between this ideal

and survey take shape a restaurant, which specializes in Western and Vietnamese

cuisine will bring additional services for consumers performed by well-training staff

who are recruited and sorted out carefully from hospitality schools and from other

sources in this service business

In fact, there are two products in service business operated in parallel They are

tangible and intangible products It is not difficult to build the tangible products but

it is not easy to make the intangible ones Tangible products are the main blood

vessel to keep business alive but intangible ones are considered as the heart of

business Therefore, the staff will be screened carefully and well-trained regularly

before, while and after each of working day in order to make this restaurant’s vessel

is always operation The service manner of staff and the way of food serving will be

the second priority of business strategy of this restaurant just after the food taste

To the Western cuisine, the main menus of this restaurant are beef and seafood

dishes because these foods are not only the main nutrition but also their common

dishes To the Vietnamese foods, beside traditional foods, the menu will focus on

greens The most favorite foods of consumer have changed they do not want to have

a meal with too much animal protein instead of high vegetable vitamin Because of

that, the mainly cooking methods that are in the menus are steam, boil, and grill

Here is also the food cuisine to make foods decrease its high fat content

With an assumption about high risks which can happen when analyses financial

health through estimating all costs of good sold and expenses, the obtained results

shows that the WVFR is feasibility project With the starting capital of

4,356,581,000 VND will bring up NPV = 14,082,515,000 VND, IRR = 249.03% and PP

is 1 year and 7 months to the investors whereas using this amount to put into bank

with compound rate 11 % in five year, they only get about 7,341,092,000 VND

COMMENTS OF TUTOR

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Ho Chi Minh City, December, 2010

Tutor

Dr Nguyen Van Ngai

TABLE OF CONTENTS

Page

Undertaking i

Acknowledgements ii

Executive summary iii

Comments of Tutor v

Table of contents vi

Acronyms ix

List of figures and tables x

List of charts xi

Chapter 01 INTRODUCTION 1.1Rational of the project 1

1.2The project objective 2

1.3Research methodology and data collection 2

1.4Scope and limitation 3

1.5The content of The project 3

Chapter 02 THEORETICAL FRAMEWORKS 2.1 Brief on styles of service 4

2.1.1 English service 4

2.1.2 French service 4

2.1.3 American service 4

2.1.4 Vietnamese service 4

2.1.5 Silver service 5

2.2 Entrepreneur and entrepreneurial process 5

2.3 Opportunity assessment 7

2.4 Business plan 8

2.4.1 Resource determination 9

2.4.2 Marketing research 10

2.4.3 Financial appraisal 10

2.4.3.1 Net Present Value 10

2.4.3.2 Internal Rate of Return 11

2.4.3.3 Payback Period 11

Chapter 03 FOOD MARKET OF HO CHI MINH CITY 3.1 Brief on cooking arts in food market 12

3.2 Market potential on food realm of Ho Chi Minh City 13

3.2.1 Finding household expenditures in daily life activities 13

3.2.2 Finding population of Ho Chi Minh City 15

3.3 Business activities of existing restaurant in Ho Chi Minh City 16

3.3.1 Information obtained from general statistic reports 16

3.3.2 Information obtained from the survey 17

3.4 New style of service for the WVFR in Ho Chi Minh City 22

Chapter 04 BUSINESS PLAN 4.1 Restaurant model 24

4.1.1 Restaurant location and capacity 24

4.1.2 Specific characteristics of the differentiations 24

4.2 Financial analysis 25

4.2.1 Involved factors 25

4.2.1.1 Renting cost and related expenses 25

4.2.1.2 Material cost 26

4.2.1.3 Restaurant facilities 26

4.2.1.3.1 Crockery ware 26

4.2.1.3.2 Cloth ware and miscellaneous items 27

4.2.1.3.3 Cutlery ware 27

4.2.1.3.4 Electrical equipments and incidental expenses 28

4.2.1.4 Bar tools and glassware 29

4.2.1.5 Kitchen ware 30

4.2.1.6 Payroll and other expenses 30

4.2.2 Starting capital 32

4.2.2.1 Capital expenditure 32

4.2.2.2 Revenue expenditure 33

4.2.3 Revenue and expenses 34

4.2.4 Criteria analysis 35

4.2.4.1 NPV 36

4.2.4.2 IRR and PP 36

4.2.5 Measure safety of the project 37

4.2.5.1 Selling price is at 100.000 Dong 37

4.2.5.2 Food cost increases 20% 37

4.3 Action plan 38

4.3.1 Source of capital 38

4.3.2 Legal procedure 38

4.3.3 Premises renovation and decoration plan 38

4.3.4 Labor plan 38

4.3.4.1 Organization chart 38

4.3.4.2 Employee schedule 39

4.3.4.3 Source and form of recruitment 42

4.3.4.4 Training schedule 42

4.3.5 Material source 42

4.3.6 Sales and Marketing plan 43

Chapter 05 CONCLUSION AND RECOMMENDATION 5.1 Conclusion 44

5.2 Recommendation 45

Bibliography 46

Appendix 1 – Questionnaire 47

Appendix 2 – Survey results 50

Appendix 3A – Calculation result 56

Appendix 3B – Calculation result 57

Appendix 3C – Calculation result 59

ACRONYMS

OU-ULB : Open University – Universiteù Libre de Bruxelles

HCMC : Ho Chi Minh City

WVFR : Western and Vietnamese Food Restaurant

etc : et cetera

Prof : Professor

NPV : Net Present Value

IRR : Internal Rate of Return

PP : Payback Period

NCF : Net Cash Flow

F&B : Food and Beverage

VAT : Value Added Tax

USD : United State Dollar

VND : Vietnam Dong

Aver : Average

Rev : Revenue

Rest Mgr : Restaurant manager

S&M : Sales and Marketing

Pax : Person

Rx : Rex Hotel

Kd : Kimdo Hotel

Con : Continental Hotel

Maj : Majestic Hotel

Gra : Grand Hotel

BS 1-2 : Bong Sen Hotel 1 and 2

Pal : Palace Hotel

SG : Saigon Hotel

Car : Caravelle Hotel

Sha : Sheraton Hotel

Osc : Osca Hotel

Hya : Park Hyatt Hotel

Dux : Duxton Saigon Hotel

Leg : Legend Hotel

LIST OF FIGURES AND TABLES

Page

Figure 01 - 02: Food decoration 13

Table 01: Monthly average expenditure per capita 14

Table 02: Average income per capita 14

Table 03: Population statistics of HCMC 15

Table 04: Numbers of foreign visitor com to HCMC 15

Table 05: Numbers of room of hotels around the area 17

Table 06: Estimate to seating capacity 26

Table 07: Crockery ware 27

Table 08: Cloth ware and miscellaneous items 27

Table 09: Cutlery ware 28

Table 10: Electrical equipments and incidental expenses 28

Table 11: Bar tools and glassware 29

Table 12: Kitchenware 30

Table 13: Employee payroll 31

Table 14: Training expenses 31

Table 15: Uniform Expenses 32

Table 16: Capital expenditure 33

Table 17: Revenue expenditure 33

Table 18: Profit and Lost 34

Table 19: Interest and Debt repayment schedule 35

Table 20: NPV calculation 36

Table 21: Roster for servers 40

Table 22: Roster for kitchen 41

Table 23: Roster for administrative staff 41

LIST OF CHARTS

Page

Chart 01: The kinds of restaurant that consumers usually come in HCMC 18

Chart 02: Restaurant location where people frequently come 18

Chart 03: Price that consumers usually paid 18

Chart 04: Top priority is belong to food tasting 19

Chart 05: The second priority is sanitation 19

Chart 06: The third rank is staff manner 19

Chart 07: The fourth rank is decoration of dishes 19

Chart 08: Dining room design versus Menu price 19

Chart 09: Dining room design versus Menu price 19

Chart 10: Survey about hygiene in existing restaurant 20

Chart 11: Survey about attitude of staff in existing restaurant 20

Chart 12: Price that consumers are willing to pay for their meals 21

Chart 13: Survey about Vietnamese food served by Western style 22

Chart 14: Organization chart of the WVFR 39

CHAPTER 01

INTRODUCTION

This chapter is going to give good reason for forming this project Meantime, it

shows the scope and limitation of this project

1.1 Rational of the project

Foods and drinks are the main nutrient sources to help us survive It is true

Wherever we live or whatever we do, we surely must have enough calories to

recycle energy to heat and warm our body We cannot live without eating or

drinking for only a few of days For that reason, in order to survive people have to

strive to make money to get food and beverages Perceiving the importance of the

food & beverage service market, there are many existing restaurants invested to run

these businesses They provide food services from single dishes to multi dishes,

from common style to luxurious style Along with it are additional services that

offer variety differentiates from restaurants to restaurants drawing consumers with

different taste to enjoy However, the hygiene in public meals is most important

thing that eaters are still taking into consideration The eating habit of eating from

same plate is traditional to the Vietnamese and customs to most Asian countries

This eating style needs maintaining in the family and shows the sharing and

solidarity in the family With the extremely busy work life, this makes people have

less time to eat at home instead increase the time for eating with partners to discuss

business Thus, eating in the same plate would not be good when the infecting

bacteria can easily spread through ingestion

The HCMC economic growth draws foreigners to come with many purposes in

which food market is a vital demand during their journey Therefore, Vietnamese

foods are alternative meal for reproducing energy beside their own traditional foods

The idea to open a Western and Vietnamese food restaurant takes shape in my

mind However, to figure out a way differentiate from other restaurants became an

issue With working experience, I perceive that Western service style can be applied

for Vietnamese food service Meantime, this style can also help eaters prevent

bacteria spreading through ingestion and help timid eaters enjoy different nation

foods by their own style of eating To launch this restaurant into practice with the

goal of implementing this idea of western service with traditional Vietnamese

foods, a business plan is built to prepare funds as well as relative information for

driving this restaurant success in food market

1.2 The project objectives

The objective is to find out the food market, to collect and analyze related

information, and to build business plan for this restaurant

1.3 Research methodology and data collection

1.3.1 Primary research

Firstly, to collaborate and talk with the closest friends about the original idea and set

up a new style service of a restaurant to get more feedback about its feasibility

After receiving response, a table of questionnaire is designed and sent to five

friends for feedback of opinions and idea to make it better Then contribute 500

samples of questionnaires through emails to companies, representative office and

other personal emails in order to collect relative information for this plan

Meanwhile, I also find out salary of staff, input factors, facilities from suppliers, etc

who are running restaurants in order to forecast all expenses to prepare funds for the

project

1.3.2 Secondary research

I also seek data and information about population growth, expenditure per capita of

resident in eating and drinking, numbers of tourists that visited HCMC per year,

citizen income from newspapers, Television, Functional departments, to define

market needs for the business in this field

1.4 Scope and limitation

This project is a combination between the theories I have learnt from school,

observations and my idea thus association between ideas and theory into reality is

not simple In the meantime, the research and data collection are just in short time

so that it is still shortcoming There are only 281 samples feedbacks for market

research in the 500 samples sent; thus, fidelity to market assessments is not high

Besides that, consumer psychology is always changed It mostly depends on

income, socio-economic condition, government policies, etc, therefore data

collected from surveyed people maybe right at this moment not forever

Furthermore, this project is calculated based on the condition of the economic

downturn, which makes some data such as interest rate, inflation rate, market price,

etc not stable Besides, this project focuses on investing a restaurant Hence, what

dish in the menu is not elaborated

1.5 The contents of the project

Chapter 1 : Introduction

Chapter 2 : Theoretical framework

Chapter 3 : Food market of Ho Chi Minh City

Chapter 4 : Business plan

Chapter 5 : Conclusion and Recommendation

CHAPTER 02 THEORETICAL FRAMEWORK

This project is build on foundation of knowledge obtained from textbooks, teachers,

professors, friends, practicable observation and experience Hence, in this chapter,

relevant theories for doing this project are reviewed

2.1 Succinctness about styles of service

2.1.1 English service

Referring to the "Host Service" the host plays an active role in the service Foods

are brought on platters by the waiter and are shown to the host for approval The

waiter then places the platters on the tables The host either portions the food into

the guest plates directly or portions the food and allows the waiter to serve For

replenishment of guest food, the waiter may then take the dishes around for guests

to help themselves or be served by the waiter

2.1.2 French service

It is a very personalized service Foods are brought from the kitchen in dishes and

salvers, which are placed directly on the table The plates are kept near the dish and

the guests help themselves to pick food into their plates by separate service tools

2.1.3 American service

The American service is a pre-plated service, which means food are prepared and

served onto the guest's plate in the kitchen itself prior to serving it to the guest The

portion is predetermined by the kitchen and the accompaniments served with a well

balance diet, the entire presentation in terms of nutrition and color These types of

service are commonly used in a coffee shop and fast food chain where service is

required to be fast

2.1.4 Vietnamese service

The Vietnamese service is a family service Foods are prepare and beautifully

decorated in a large dish and arranged in the middle of the table The guests serve

themselves by their own chopsticks and spoons

2.1.5 Silver service

The table is set for hors d'oeuvres, soup, main courses and sweet dish in sterling

silverware The food is portioned into silver platters at the kitchen, after that the

waiters or waitresses bring it to the restaurant and place at the sideboard with

burners or hot plates to keep the food warm Plates are placed before the guest The

waiter then picks the platter from the hot plate and presents the dish to the host for

approval He serves each guest using a service spoon and fork All food is presented

in silver dishes with elaborate dressing

2.2 Entrepreneur and Entrepreneurship

An entrepreneur is someone who perceives an opportunity and creates an

organization to pursue it (Bygrave, 2007) It could be interpreted that developing a

new enterprise comes out from personal, sociological and environmental factors A

person could have an idea but whether or not he/she decides to pursue it depends on

factors as family, friends, role models, the state of economy, or the availability of

resources However, where do they get ideas? In fact, most of the ideas are formed

by jobs they do routinely on a day-by-day basis, or at least works relative to

industries which they are employed or of which they have previous experience

During their working time, they found faults and had ideas to change it by other

working method or helping tools to make it better As mentioned above, ideas are

only the first step The primary factor is whether they decide to pursue it This

depends on many factors The characteristics that people usually used to describe

most entrepreneurs are decisiveness, determination, devotion, details, etc They are

the person who has a higher desire to be in control of their own fate and never gives

up even when they have to confront difficulties that seem to be insurmountable

According to the lecture of Prof Olivier Witmeur, “Entrepreneur is as

revolutionary” They are people who like a challenge, face risks and try to reduce it

as well as give a solution to overcome Once they accurately assessed the issue, they

make their decision quickly and implement it as swiftly as possible They always

pioneer in fields that seem unlikely to do to the others They make themselves

active and never accept their own destiny They want to control their fate rather than

depend on it As in the lecture of Prof Olivier Witmeur, “Entrepreneur is as

manager” When embarking to business, they deal it with different aspects of

manager Sometimes they play the role of human resource manager; other time they

are financial manager or even a sales manager They are never tired of working but

opposite looks forward to it They wish the time of a day is longer; even they can

work without sleep They have ability to solve cases swiftly They think that failure

is only a first step of success Therefore, from their first business idea, he/she has to

be ability to associate all available sources from contacts and friends to funds to

create a good team for bringing idea into practice To do that it requires a process of

assembling and combination sources to carry out the idea

Entrepreneurial process involves all the functions, activities and actions associated

with perceiving opportunities and creating organizations to pursue them (Bygrave

2007) From the first business idea to forming entrepreneurship, it takes many

stages Firstly, He/She assess opportunity and select right time to develop the idea

Then, they need a host of contacts, including customers, suppliers, investors,

bankers, etc to find whom they can help before embarking on In the meantime, they

use available sources to start doing steps to develop the business idea From the first

step of legal documents, premises renting procedure to the stages of preparation,

operation, development and improvement are turning points that entrepreneur must

overcome According to the lecture of Prof Olivier Witmeur, there are three

variables in an entrepreneurship The first one is relative to the entrepreneur

characteristic as skill, profile, motivation, leadership and commitment The second

one concern about the business activities as reactions from customers, investors,

potential employees and the last one is about macro factors like governmental

policies, and economic conditions These variables interacts each other at the first

time of emerging business idea to the period of thriving business and stability In

short, entrepreneurship is as process

Entrepreneurship as a process

Source: Lecture of Professor Olivier Witmeur

2.3 Opportunity assessment

An opportunity has the qualities of being attractive, durable, and timely and is

anchored in a product or service, which creates or adds value for its buyers or end

users (Jeffry A Timmons, 2004) With an Entrepreneur, a good idea is nothing

more than a tool in his/her own hand It is only the first step in a task of converting

his/her creativity into an opportunity Therefore, a good idea must be started with

what customers and the marketplace want and it must be done by a series of trial

and error iterations until it can fit what the customer are willing to pay for In the

meantime, the ability of the team to achieve it is feasibility According to the lecture

of Prof Olivier Witmeur, for an opportunity has these qualities, a window of

opportunity must be opened and remain open long enough In the meantime, at the

time of “window of opportunity” opened, a good opportunity must have critical

characteristics: market size is big enough, customer are willing to pay for, and

economic condition is appropriate Normally, a window of opportunity is opened at

the first stage of a life cycle of a product

• Individual variables: skill, profile, motivations…

• Group-level variables: reactions from customers, investors, potential

Assembling resources:

team, € …

Launch

Build / Grow

Harness

Opportunity window

Sales

Time

Early adaptors

Early majority

Late majority LaggardsInnovators

Opportunity Window

Source: Lecture of Professor Olivier Witmeur

2.4 Business plan

There are three crucial components for successful new businesses They are the

opportunity, team and the resources (Bygrave 2007, The entrepreneurial process)

These three ingredients are integrated and interactive each other, which strengthens

the successful new business With good idea converted into business opportunity, a

preparation to grasp it and an association between resources to activate it required a

concrete plan to describe what, when and how to do That is called a business plan

According to the lecture of Prof Olivier Witmeur, Business plan is a professional

document describing one business opportunity and the way a team will start and

manage a new firm in order to demonstrate its feasibility into a given period

Three driving forces for successful new business from Jeffry A Timmons – New Venture

Creation

Source: Lecture of Professor Olivier Witmeur

Te a m

Com m unicat ion

Fit s and gaps

BUSI N ESS PLAN

The above figure shows that there is no point in having a first-rate opportunity for a

new business if there is second-rate management team Nor there are good

opportunity and management team without the appropriate resources

According to the lecture of Prof Claude Jottrand, in order to build Business Plan we

need referring to all aspects of company activities such as products, marketing,

production, R&D, Human resource and financial analysis When analyzing these

elements, they are affected by business context like industry trends, present and

future competitors, Government policies, etc… therefore, collecting, analyzing and

processing information in business plan accurately will help company prevent risk

when carrying out the plan in the practice

2.4.1 Resources determination

Most of successful entrepreneur are persons who knows how to allocate and be

frugal with their scarce resources They know what resources are crucial for

company’s success in the market place and how to proportionate to it In practice,

for instance, there are some stages that entrepreneur have to focus most of scarce

resources on renting a good location with high rental price instead of cheap one for

a poor location or on recruiting potential employees with high cost for business

strategy Contrary to that, there are some parts in business fields, they are

outsourcing instead of using in-house employees to do it With that way, they need

not own or lease their own factory and equipments Nor does it have to worry about

recruiting and training production workers This can help them keep overhead

lower In short, a successful entrepreneur will know when and how to allocate, and

to proportionate their scarce resources in order to keep overhead low, high

productivity and ownership of capital assets to a minimum By doing this, they

minimize the amount of capital they need to start their business and make it grow

2.4.2 Market research

Market research is necessary for the entrepreneur to understand the market The

market research is a tool to uncover the needs and behavior of customers, buyers or

end-users; to foresee evolution of the marketplace: size, maturity, growth; to

identify market segmentation; to wait for the major trends affecting the market; to

realize competitors and their strategies; and to establish the distribution channel All

these works is to help the entrepreneur select a niche market, adapt and refine the

offering to the selected market, forecast sales and benchmark for the marketing

plan According to Prof Claire Gruslin, the Solvay Business School, the methods of

market research are desk research, field observation, qualitative study, quantitative

study A particular case of the research, a proper method or the combination will

taking into consideration

2.4.3 Financial appraisal

In order to give a final decision for investment, the investors usually consider

criteria in appraisal result of a proposed project There are many criteria to appraise

project feasibility or not However, investors usually use criteria such as Net Present

Value, Internal Rate of Return, and Payback Period to determine investment

2.4.3.1 Net Present Value

“NPV is equal to the difference between the Present Value of the cash flow

generated from the investment and the initial amount of money invested”, the

lecture of Prof Claude Jottrand from the Solvay Business School Therefore, the

NPV, after calculated, may be positive or be negative The criterions are used in

project appraisal because it indicates that the amount of money of investors is better

to make project investment or put it on a saving account of the bank The formula to

calculate this criterion has a form as follow

C1,j/(1+r)1,j: Present Value of cash flow generated after year one,…, and year j

(1+r)1,j : Compounded interest to make value of money from present to future

If the NPV is positive it means that the cash inflow is much more than the cash

outflow hence, it is better to make an investment and vice versa

2.4.3.2 Internal Rate of Return

IRR is a proper interest rate to make the Net Present Value of all cash flows of the

project equal to zero The IRR is calculated by using two NPV at different discount

rate as long as one NPV is positive and the other is negative, then the equation to

find IRR will have the following form

The meaning of IRR is that if IRR is higher the discount rate it is better to make

investment and vice versa

2.4.3.3 Pay-back Period

Another criterion is usually used to appraise investment is PP Following the lecture

of Prof Nguyen Tan Binh, OU, the PP is the length of time required to recover the

initial investment capital The method is to sum up all the Net Cash Flow generated

by the investment until the initial investment capital is reached

CHAPTER 03

FOOD MARKET OF HO CHI MINH CITY

3.1 Brief on cooking arts in food market

In the food service market, there are many methods to process foods and drinks to

make it more appetizing and delicious Some of dishes or drinks after being

processed it were hardly for us to know what the ingredients are Especially, experts

in this field, they can create dishes or drinks that make us unable to know what it is

Below is overview about food sources processed for our daily meals:

Food products are comprised from animal sources such as:

- Fowls : Chicken, Duck, Turkey, etc

- Farm animals: Cow, Goat, Lamb, etc

- Seafood : Fish, Crab, Shrimp, etc

Other foods are made from plants such as:

- Food comes from stem : Asparagus, Bamboo shoot, Bean sprouts, etc

- Food comes from leaves : Lettuce, Cabbage, etc

- Food comes from roots : Potato, Carrot, Beet, etc

From above foods, cooking experts can create thousands of dishes with different

smells, flavors and recipes to take shape varieties style of eating and drinking world

From rice, for instant, they can process many kinds of traditional food of each

country such as “Pan cake, Steamed rice flour and wrapped with pork meat,

Spring-rolls” in Vietnam; “Cantonese fried rice” in China; “Sushi” in Japan Or we can

make many dishes which only come from one seafood named “Crab” such as

steamed crab, sautéed crab with tamarind, grilled crab, curry crab, crab in hot pot,

etc

Figure 01: Experts can make differently traditional dishes from only rice product

Spring rolls Cantonese fried rice Sushi

Source: http://ws.infospace.com

Nowadays, we can easily find restaurants, ranging from cheap to high price; from

common to luxurious, just step outside of your door or working place in HCMC

With high demand in eating and drinking, consumers request methods of cooking,

decoration, service manner, space and a warm atmosphere much better However,

we only discover that form of cooking methods in luxurious restaurant or restaurant

in well-known hotels

Figures 2: Mouth-watering display of dishes

Source: Author’s collection

Through cooking methods and eating culture of each country will take shape of

specific style of service

3.2 Market potential in food realm of Ho Chi Minh City

3.2.1 Finding household expenditures in daily life activities

Expenditures in human life cover many things from unessential to essential ones

With the characteristic of needs, they usually prioritize to spend money on

essentials and less prior to non-essential part That is why expenditures of each

family are scheduled monthly or even yearly There is needs that force human life

expenditure to be on passive and vice versa These expenditures are eating and

drinking According to statistic report from “Statistical office in Ho Chi Minh City”,

shows that household expenditure in eating and drinking takes highest ratio to the

Source: Statistical Office in Ho Chi Minh City

With monthly expenditure of household on food sector indicates that eating and

drinking are indispensable needs With this particularity, once their income rises

they are going to spend more on this sector and require better quality Ho Chi Minh

City is one the most developing city of whole country in culture, socio-economy

This development has created more jobs for the citizen and thus, their income

increases more and more Their costs of living are more improved Statistics in the

past ten years illustrate for this reality

Table 02: Average income per capita in HCMC

Unit: USD

Year to year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Income 1,365 1,460 1,558 1,675 1,720 2,000 2,050 2,180 2,400 2,600

Source: General Statistics

As above-mentioned, the economic growth of HCMC creates more jobs, decreases

the jobless and brings up a stable income for people who is living and working here

3.2.2 Finding the population of Ho Chi Minh City

Once the economy of the city is growing, the city will be good location in which

many people with choose to settle their life There are no official reports about the

accurate figures of HCMC resident due to the dwellers of other places also move

here to find chances for business and stable their life However, there are statistic

reports about the number of registered residents as follows:

Table 03: Populate Statistics of Ho Chi Minh City

Unit: person

Population 6,239,938 6,424,519 6,650,942 6,810,461 7,168,000

City area (km 2) 2,095.1 2,095.1 2,095.1 2,095.1 2,095.1

Source: Statistical Office in Ho Chi Minh City

Besides that, the number of foreign visitors come to HCMC are also growing up

every year They come for many purposes such as tourist, entertainment, seeking

business opportunities, etc

Table 04: Numbers of Foreign visitor come to HCMC

Person 2,000,000 2,350,000 2,600,000 2,800,000 2,600,000

Source: HCMC Department of Culture, Sports and Tourism

The table 04 shows that the number of foreign visitors slightly drops down in 2009

because of economic crisis However, according to Mr La Quoc Khanh, Deputy

General Manager of “Department of Tourism in HCMC” declared on “Saigon

times” published in 17 December 2009 that HCMC would greet about 2.8 million

foreign visitors in the year of 2010 base on corporate contract, which was signed

between travel agencies to their partners

Regarding to above analysis indicates that the needs in food sector is growing and

demands for spending on this is higher more and more That is a reason why there

are many business activities in food market established and the number of this

business sector are increasing everyday

3.3 Business activities of existing restaurant of Ho Chi Minh City

As previously mentioned, through the cuisine the cook experts can make consumer

surprised by the variety of cooking methods For this reason, investors do not want

to miss a chance to do business in this field Restaurants rise up with different kinds

of model as “Seafood restaurant, Italian food restaurant, Western food restaurant,

Asian restaurant, Vietnamese restaurant, etc” Moreover, in order to meet

consumer’s demands, they combined between two or more types of cuisine in the

same restaurant to offer more alternative options and to maximize volume in their

market share

3.3.1 Information obtained from general statistic reports

According to the report of “The department of planning and investment in Ho Chi

MInh City” counting to 31 December 2009, there are over six hundreds and

seventy-five companies (inclusive of representative office) located on the

three-main street of the center of HCMC Those are Le Loi Avenue, Nguyen Hue

Boulevard and Pasteur Street In other word, if average number of office workers in

each company only has 8 person, there will be at least 5,400 office workers who are

doing their job for these companies (exclusive of local resident and non-resident)

will have needs for food and beverage services

Meanwhile, the increase of visitors come to Ho Chi Minh City create opportunities

for investors to exploit it and provide services for this market The number of

hotels, motels is also gives rise surrounding this area to accommodate visitors

Regarding to hotel accommodation, there are about 2,600 rooms in luxury hotels

which belong to The Saigon-tourist Holding Company and its join-venture,

exclusive of hotels and motels do not belong to this chain , located only on the three

streets of district 1 (Nguyen Hue, Le Loi and Dong Khoi) Thus, in the peak season,

there will be over 4,000 visitors stay in these hotels for each day

Table 05: Number of rooms in hotels located on Le Loi, Nguyen Hue and Dong Khoi

streets

Hotels Rx Kd Con Maj Gra BS

1-2 Pal SG Car She Osc Hya Dux Leg

Rooms 217 130 83 175 104 184 137 96 335 374 90 268 203 283

Source: The Saigon-Tourist Holding Company

Perceiving this potential market, the investors in food business have invested in

restaurants to supply foods for this market According to the statistic reports from

“The department of planning and investment in HCMC”, there are over five

hundreds restaurants located in district one in which there are about sixty-eight

restaurants located in the four streets of district one Those streets are Le Loi

Avenue, Nguyen Hue Boulevard, Dong Khoi Street and Pasteur Street The

three-main streets are Le Loi, Nguyen Hue and Dong Khoi gathers most of office building

and well-known hotels of HCMC; for this reason, there are over fifty restaurants to

provide foods addressed here in the total of sixty-eight ones These restaurants are

business in Western and Asian foods in which, there are about twenty restaurants

specialize in Western-Asian foods, Fifteenth restaurants are in Western foods only,

ten restaurants are in Vietnamese foods and the rest provide special foods of other

countries as Korean foods, Mexico foods, etc These restaurants are classified as a

style of standard restaurant because of the specific characteristics of this area

3.3.2 Information obtained from the survey

Through the market survey about consumer’s choice to restaurant style, the majority

of surveyed people selected “Family restaurant” when they read the question

“Which type of restaurant have you preferred eating frequently?” The food market

in HCMC is very diversified in which family restaurant are more attractive to

consumers because of acceptable price, diversifying in service forms and animated

atmosphere to make joyful psychology of consumers while they are enjoying dishes

However, there are other consumers with different schools of thought about eating

and drinking atmosphere These consumers like to be enjoying their dishes in a quiet

ambience place and to be served in a specific style beside tasteful dishes In the two

hundreds and eighty-one surveyed people there are 42.70 % answers to come to the

standard restaurant frequently compare to 53.38 % ones to enjoy at the family

restaurant The figures are illustrated in the chart below

Chart 01: Consumer’s choice about type of restaurant they prefer eating frequently

Source: Author’ survey

The above chart indicates that there is only 3.91 % of who tastes this service at

luxurious one This cannot be confirmed that the luxurious restaurants do not meet

consumers’ expectation Opposite to that, these ones are places where just only

serve consumers with particular purposes By sorting questions to figure out the

location of existing restaurant that consumers frequently prefer coming located on

district 1 and district 3 and the price where they usually have to pay for their meal in

such kink of these restaurants is quite expensive

Location of restaurant that they prefer coming Price consumer usually paid

Where does your prefer restaurant locate?

90.84%

9.16%

District 1, 3 Other districts

Source: Author’ survey

Besides that, the survey results also show that the psychological trend of eaters has

changed since their living standard is higher Before, their eating and drinking

psychology is not only finding a restaurant with cheap price but full stomach also

Now, according to the survey, the priority level when they make a decision to

choose a food place is in the other way of thinking These charts below will

illustrate the above mentioned

>300.000

Chart 04 Chart 05

First priority belongs to food tasting Second order is sanitation

Taste of food and beverage?

Source: Author’ survey

Dining room design versus Menu price

Dining room design?

Source: Author’ survey

The chart 08 and chart 09 show that the selection between Dining room design and

Menu price are the same Here is a limitation of the survey due to the number of

samples is few However, it indicated that the trend in making decision to choose a

good place for their meals They do not determine menu price as a first or second

priority once their monthly income are increased and their cost of living is higher

Food and beverage decoration

However, they rarely received what they are expected Sometimes, criteria that they

think it must be put on the second priority in restaurant but it is in the contrary The

survey shows that there are still many restaurants not attach much importance to

hygiene when the health care becomes what people take into consideration This is

illustrated by the majorities of answer assess for that

Chart 10

Hygiene in existing restaurant

Dinning room hygiene?

Source: Author’ survey

Even the attitude of staff in existing restaurant have not met standard of service in

such a kind of these restaurant This point belongs to the responsibility of the

managers who monitor the restaurant Also from the survey shows that the majority

of surveyed people they select “Fairly good” instead of “Good or Very good” to

what they have paid

Source: Author’ survey

The above survey indicates that there is only 15.27% answers assess very good and

18.32% answers rate staff manner of existing restaurant as good quality while the

Rest room hygiene?

highest ratio of 44.27% evaluates for this criterion is just “fairly good” It is not fair

to the consumers compare to the expenditure they already paid for their expectation

This restaurant planed to exploit food market right in the center of Ho Chi Minh

City; therefore, the survey questionnaires about price that consumers are willing to

pay are also referenced With the results obtained from consumer feedbacks show

that they accept to pay with high price for products and services that can satisfy their

Source: Author’ survey

The surveyed result shows that the highest ratio is 23.66 % with price VND 200.000

the next ratio is 20.61 % of the price VND 120.000 and the price VND 250.000

with 19.85 % selected by the consumers are three prices, which consumers accept to

pay with pleasure to have a good service in return However, the selected price for

this project is planned at VND 120.000 in the beginning of launching business

instead of price VND 250.000 or VND 200.00 because of the following reasons:

o To prevent subjective judgments about menu price through out the market

survey as well as other aspects in the context of economy nowadays

o At the beginning time of operation the WVFR need to get market share as

well as to poll market price In the meantime, there is still shortcoming in this

period that needs to be adjusted

Once everything is fine, there will be a slight policy to adjust price accordingly